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How accounting firms can tap into benefits of AI

The concept of artificial intelligence (AI) sometimes leads to contemplation of a future in which robots will do some of the most important jobs in the world. Doctors, lawyers, and accountants would all be affected by a machine-intensive world, and it would mean the end of millions of jobs as we know them today.

Amid such predictions, many organizations find it difficult to comprehend what AI really is, what the benefits are, and what it means for their organization. The technology can help empower existing professionals, not necessarily remove them, particularly in specialist fields.

Accounting is one such field, and many accountants are aware of the changes that are coming. In the U.K., FreeAgent’s Future of Accountancy report revealed that 96% of accountants believe that either all or some accountancy work will be automated by 2022. It’s worth noting that automation is just one aspect of AI — there are many more uses of the technology, but even so, it’s clear that accountants know their roles are changing, and that they will have to adapt to keep up with the times.

“We see AI as the next step in automation and efficiency provided by cloud software. It will increase time savings, reduce errors, and aid compliance,” said Jonathan Bareham, director of U.K. accountancy firm Raedan.

“That all means we get to spend more time doing more meaningful work, actually helping clients run their businesses — data review rather than data entry,” he added.

As Paul Jenkinson, founding partner of cloud technology company Whitespace, explained, this change is similar to that of the introduction of the electronic spreadsheet. “This led to 400,000 fewer accounts preparation jobs in the U.S. but 600,000 more accountancy jobs,” he said.

While AI may not produce more jobs than it is likely to affect, the point is that the technology could do more good than harm.

So what type of technologies are accountancy firms looking at to help them?

Raedan and fellow accountancy firm Valued use Xero and Receipt Bank, which tap into machine learning, while AI prediction tool Fluidly is used to examine cash flow. Valued also uses Expensify to manage client expenses policies.

“We’ve implemented these apps across our business but also for our clients,” said Darren Glanville, director of operations at Valued.

“We are also looking at using bots in our proposal tools and our website to automate answers to basic questions at this point, but looking to scale that over the next 12 months,” he said.

Glanville said that the tech products used not only helped efficiency and costs, but also the quality of output. The cost to serve is lower and the margins are higher, but perhaps most critical of all is the empowerment given to staff.

“Recruitment and retention of high-quality staff is a big issue, and using AI can empower staff to do more of the work that they find enjoyable and challenging and have a much more robust development plan,” he said.

Omar Siddiqui, founder of accountancy firm Reddy Siddiqui in the U.K., uses a business process advisory AI tool called Runagood, which takes into account the business’s financial information, repeat customers, IT and software used, and its goals and aspirations. It then analyzes the business’s strengths and weaknesses by benchmarking the business against high performers in its sector, making specific recommendations for areas that can be improved. He believes that the tool offers huge benefits in improving the quality of relationship with clients.

Big Four are ahead, but small firms should not be deterred

While smaller accountancy firms have to rely on the strides being taken by existing partners or technology companies, the Big Four professional services firms are several steps ahead in their use of AI. For example, EY recently applied AI to the lease accounting process, where the technology streamlines the data capture from contracts by identifying the relevant clauses for accounting treatment. Meanwhile, PwC has developed its own AI tool dubbed GL.ai, which identifies anomalies in a business’s general ledger.

“We’ve trained the tool using over 1 billion journals, and now, using advanced algorithms, it can analyze billions of data points in milliseconds and apply judgment to spot items of potential error or fraud,” said Gilly Lord, head of audit strategy and transformation at PwC.

But while the large companies have more resources, this shouldn’t deter smaller companies.

“Smaller organizations have an advantage of being more agile and quick to respond to market changes. They can also bypass the requirement of significant investments that AI demands by finding the right mix between ‘buy, build, or partner,’” said Jeanne Boillet, EY’s global assurance innovation leader.

Indeed, James Poyser, founder of inniAccounts, which has revenue of over $1 million and employs 20 people, said his company is bootstrapped and yet remains a pioneer of new technology.

He advises accountants to look at processes they can speed up, make real-time, or remove from humans totally.

“In turn, freeing up time that accountants can spend on planning and strategic advice, and time for the clients to do more of what they are good at,” he said.

Access to technology shouldn’t be an issue to any firm, Poyser emphasizes. The key hurdle is ensuring the right skills are available in-house. Poyser has therefore worked with students in master’s degree programs in big data analytics and offered them internships, whereby they apply the research and knowledge they have to the real-life situations his development team faces.

What is ‘best practice’ when it comes to AI?

Here are some of the best pieces of advice for running AI projects.

Don’t focus on AI because it’s AI. “I think too much focus can be placed on the term, and really as a practice, you just need to decide if the software will help you achieve your goals,” Raedan’s Bareham said.

Start small. “It is imperative for accountants to start small but think big: starting out by doing simple proof of concepts that are highly relevant for your business will ensure that your use of AI in the future will be suitable and effective for you specifically. And once you reach the stage of scaling up your AI capabilities, select your use cases wisely,” EY’s Boillet said.

Ensure the team is open-minded. “AI will mean new ways of working for everyone, so from the most junior to the most senior member of an audit team, we will all need to be open-minded and quickly pick up new technology, acquire new skills, and embrace career-long learning,” PwC’s Lord said.

Measure success. “Get staff buy-in, get executive sponsorship, define what success looks like and how you will measure it. Perform an ‘after action review’ and iterate — you don’t get it right first time, but keep on iterating,” Valued’s Glanville said.

Don’t think what works now will work in 10 years’ time.“We need to consider how our clients consume services. While those of us above the age of 35 may still value the personal touch of a phone call rather than an email or text, accountants and firms have to consider whether this will be the same in the next 10 or 20 years — particularly with the rise of automated online bots,” Glanville said.

Forecasting isn’t a crystal ball. “Forecasts should never be about predicting the future — it is far too complex — but about helping users to make decisions today that increase the probability of the client achieving their objectives. Advisers need to help clients make data-driven decisions considering this complexity and uncertainty,” Whitespace’s Jenkinson said.

— Sooraj Shah is a freelance writer based in the U.K. To comment on this article or to suggest an idea for another article, contact Sabine Vollmer, a JofA senior editor, at Sabine.Vollmer@aicpa-cima.com.

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